UK unemployment at lowest level since 1975

Unemployment in the UK fell to its lowest level in 43 years even as wage growth remains subdued. The Office for National Statistics (ONS) reported that the jobless rate in June fell to four per cent. This is below the 4.2 per cent level forecast by economists. However, pay growth slowed to its weakest in almost a year as wage inflation cooled in the second quarter of 2018, ONS figures showed.

The trend in earnings confounded predictions from the Bank of England that a tighter labour market would intensify pay pressures, and brought the decision to raise interest rates earlier this month under fresh scrutiny.

In the meantime, the German economy grew more than expected in the second quarter, underpinned by higher household and State spending, in spite of the looming trade dispute with the US. GDP rose by 0.5 per cent quarter-on-quarter in April-June, the Federal Statistics Office said last week. The figure beat economists’ forecast of 0.4 per cent growth.

The Federal Statistics Office also revised up the quarterly growth rate for the first three months of the year to 0.4 per cent from 0.3 per cent.

Fears of a full-blown trade war between the EU and the US deepened during the second quarter. However, these eased last month after US President Donald Trump met European Commission president Jean-Claude Juncker.

Finally in the US, retail sales rose more than expected in July, extending solid consumer-spending gains to the start of the third quarter, as households snapped up clothes and headed to restaurants. A Commerce Department report showed last week that retail sales increased by 0.5 per cent in July. But data for June was revised lower to 0.2 per cent instead of the previously reported 0.5 per cent rise. Economists had forecast retail sales inching up by 0.1 per cent in July. Compared with the same month last year, retail sales in July increased by 6.4 per cent. The data suggest that consumer spending is continuing to drive the economy, as tax cuts have put more money in the pockets of Americans.

This report was compiled by Bank of Valletta for general information purposes only.

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